Purported partnership return triggers TEFRA procedures

Plain-English summary

Chief Counsel advised that TEFRA applies when a purported partnership return is filed even if no valid partnership exists. State law determines whether an unsigned trust instrument created a valid trust. The partnership filing establishes a minimum assessment period under §§ 6229 and 6233, although the assessment periods for trust partners or beneficiaries may be longer if their own returns were filed later. In light of those rules, the actual authority of the person who signed the purported partnership return may be irrelevant.

Ruling snapshot

• Question: Do TEFRA procedures and the partnership assessment period apply when a purported partnership return was filed for an entity whose validity or signer's authority is disputed?
• Outcome: Advice given
• Key authorities: IRC §§ 6229, 6231(g), and 6233; Treas. Reg. § 301.6233-1(b)

Full text (IRS public release)

ID: CCA_2014092608423801 [Third Party Communication:

UILC: 6233.00-00
Date of Communication: Month DD, YYYY]

Number: 201442056
Release Date: 10/17/2014
From:
Sent: Friday, September 26, 2014 8:42:38 AM
To:
Cc:
Bcc:
Subject: RE: Tefra question

Under section 6233 TEFRA applies if a purported partnership return is filed, regardless of whether a valid partnership exists. . I.R.C. 6233(b); Treas. Reg. 301.6233-1(b); Andantech v. Commissioner, 331 F.3d 972 (D.C. Cir. 2003); Frazell v. Commissioner, 88 T.C. 1405 (1987). See also I.R.C. 6231(g).

State law determines whether a valid state trust exists if the trust instrument is unsigned.

The partnership return would create a minimum period for assessment under section 6229 based on the application of that provision under section 6233. The underlying period for assessing the trust partners or its beneficiaries may be longer if they filed their returns after the purported partnership.

The actual authority of the person signing the return may be moot in light of the above provisions.